Since last year, it is predicted that the global economy will limp back to normalcy in 2010 and IT will play an important role in the recovery. Further, the research firm, IDC also forecasted that global IT spending will grow about 3.2% in 2010, resuming to 2008 levels of some $1.5 trillion. Meanwhile, it seems that India's $60-billion technology services industry may also receive some boost in 2010 after lousy 2009. Various Indian ministries also insist for 7-8 % growth in GDP this year.

Expecting a surge in demand

RBI, finance ministry and other industrial experts believe that India's IT sector, which remains somewhat unaffected from the global wave of recession, is likely to return to the 'business as usual' situation in 2010. But, for this, Indian IT sector requires support from the rest of the world. The US and European markets account for about 80% of Indian software exports, and still not shown signs of recovery in demand for outsourcing that was expected in the run-up to New Year.

NASSCOM, the Indian chamber of commerce has not upgraded its exports growth target after watching the market situation of the world. It had pegged the growth to an all-time low of 4-7 % in mid-2009.

Intel's quaterly results

Intel Corp, the world's number one chipmaker is the trend setter for the world IT. The Chipzilla has reported that the fourth-quarter profit surged nearly 10-fold from the depressed year-earlier period, as revenue jumped 28%. Further, the Chipzilla has announced much higher-than-expected profits of $2.3 billion, up $2.0 billion and 875%, compared to just $234 million last year.

The company has just released its Pine Trail processors for netbooks and Moorestown platform for mobiles. The increased sales of Intel's chips means increased sales of other PC's hardware and software products worldwide.

Indian IT giants like TCS and Infosys also announced favorable results for the last quarter.

Few concerns

Many analysts suggest that the demand pattern for outsourcing is distorted and requires ample time to be corrected.  HCL Technologies, Infosys Technologies, Wipro Technologies and Genpact share similar concern. IT software export reported a CAGR of over 30% since the 2003-04 dotcom burst, but its growth fell to 16.3% at $46 billion last fiscal against 27% at $40 billion in 2007-08.

To cope up with this downtrend and competition from other new emerging markets, Indian IT companies had adopted various survival strategies like moving to fixed costs and bundling software services with back-office operations and remote infrastructure management, to retain customers and fuel growth.

Forex rate

Indian IT companies are also looking for stable exchange rate as the Indian currency has appreciated about 4% vs. US dollar in the last quarter, because, stronger rupee means less revenue for the companies. Further, besides tough global headwinds, the Indian IT providers are coping with higher costs due to wage hikes and increased sales and marketing spends.

Discussion

According to NASSCOM president Som Mittal, IT companies will have to develop new business models to grow in the present competitive market environment. For example, Wipro has adopted cloud computing, green and collaboration technologies and sees new business coming via new adoption. Further, Indian IT companies are also eyeing more business from alternative markets like the Indian and Middle East regions.